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Sabrina Chao: A Bloodline For Shipping

Sabrina Chao’s life was upended in an instant. She had been with her family’s shipping company for only about two years when her father, George Chao, suffered a stroke.

“That really threw me into a panic. Obviously, I didn’t have the maturity and experience that I have now,” she says.

For much of its 61-year history Wah Kwong Maritime Transport Holdings had been run by the triumvirate of Chao’s father, George, grandfather Chao Tsong-Yea and uncle Frank. Together they had steered the company through the industry’s most tumultuous cycles, but after the deaths of the family patriarch and Frank in 1999 and 2001, respectively, Chao’s father was on his own.

And his hands were full, looking after Wah Kwong’s fleet of oil tankers and dry-bulk and liquefied petroleum gas (LPG) carriers, so the eldest of his three daughters and his only son, Hing Chao, were press-ganged to join the family business. The third generation was to be groomed to eventually take over–or at least that was the plan. Hing had other ideas, though, and left the company to instead pursue cultural conservation in China.

Her father’s health scare was a pivotal moment for Chao. At the time she was only 30 and had never conceived of running Wah Kwong without his aid and his 40 years of experience. Any thoughts she may have harbored about giving up, though, were effectively quelled by the gravity of the circumstances.

“From early on you could see her drive and determination,” says Harindarpal Banga. The former vice chairman of commodities trader Noble GroupNoble Group and now founder of Caravel Group, Banga began chartering Wah Kwong’s ships nearly two decades ago, allowing him to watch Chao’s development over time.

“Although she was young and still finding her way in the industry, you could just tell there was no way that she was going to let the company down,” he says.

As it happened, George recovered and would eventually return to working closely with Chao for another eight years–allowing her to gradually take over the day-to-day running of Wah Kwong–before he suffered a second, more debilitating stroke in 2010.

In January Chao was elevated to chairman by Wah Kwong’s board, assuming full control of one of Hong Kong’s largest privately held shipowners, with a modern fleet of close to 30 vessels and roughly $200 million in revenue. Among Hong Kong’s coterie of tycoons, many of whom are now in their 70s and 80s, Chao’s youthful age of 39 and striking looks certainly make her a standout.

“We have the core senior management in place, and I have every confidence that we can carry on my father’s vision for this company in the years to come,” she says.

Chao’s faith in Wah Kwong’s future is, of course, tempered by the dire straits of the global shipping industry, which she describes as “the worst in history.” These are being compounded by problems in the financial system. Ships owned by Wah Kwong’s competitors that would have been seized by creditors in the past as nonperforming assets are being left to continue running because the banks themselves, particularly those in Europe, could collapse under the weight of further losses.

Shipping’s boom years that started in 2003 and led to a splurge of new ship orders came to an abrupt end in 2008, when demand slumped just as many of those vessels were ready for delivery.

Even shipping behemoths like China Cosco aren’t immune to economic vagaries. After posting an annual loss of $1.54 billion that was blamed on low freight rates and high costs earlier this year, Chairman Wei Jiafu stepped down from his post.

Analysts say the global capacity glut won’t be easing any time soon. Wah Kwong’s strategy is to ride the cycle and choose counterparties with extreme care. “In a crisis like this, asset prices are cheap,” says Chao. “For the companies with strong balance sheets, it’s the perfect opportunity to go back into the market.”

Wah Kwong has remained profitable throughout, but Chao believes the time is right to add 8 dry-bulk carriers to the company’s fleet of 13 carriers, 6 tankers and 10 LPG carriers.

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